BERLIN: German Chancellor Angela Merkel said she was ready to make “painful compromises” to clinch a coalition deal with the Social Democrats (SPD), whose leader said on Tuesday was “decision day” for negotiators after months of political uncertainty.

Both blocs agreed late on Monday they needed more time to reach a deal on renewing their “grand coalition” and decided to resume talks at the headquarters of Merkel’s party on Tuesday.

“Each of us will have to make painful compromises and I am ready for that,” Merkel told reporters.

“When we see the movements on the stock markets over the last hours, we live in turbulent times and what is expected of us as popular parties ... is that we form a government for the good of the people, one that brings stability,” she said.

Merkel’s failure to cobble together a government more than four months after a national election has raised concerns among investors and partner countries at a time when Europe is facing multiple challenges — including the need for euro zone reform and Britain’s departure from the EU.

Germany could face a new election or an unprecedented minority government if SPD members reject a coalition deal. But negotiators from both blocs said they must reach agreement on Tuesday.

Andreas Scheuer, secretary-general of Merkel’s Bavarian allies, said there was no possibility of extending the talks beyond Tuesday: “So we have to come to an agreement tonight. Anything else would be unreasonable for our citizens.”

Senior negotiators from both blocs met on Tuesday morning. A larger group of conservative negotiators was on standby for a potential briefing on possible developments from 4 pm (1500 GMT), participants in the talks said.

Germany has been governed by a caretaker government since the Sept.24 election returned no clear outcome.

After initially vowing to rebuild in opposition, the SPD is now trying to extract concessions on healthcare and employment policy that could win over sceptics among its 443,000 members, who get the final say on whether to go ahead with the coalition.

The Rheinische Post newspaper said Germany’s Constitutional Court was examining five complaints about the legitimacy of the SPD members’ ballot. A spokesman for the court said two of the five complaints had been rejected.